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ELASTIC DEMAND: Relatively small changes in demand price cause relatively larger changes in quantity demanded. Elastic demand means that changes in the quantity demanded are relatively responsive to changes in the demand price. An elastic demand has a coefficient of elasticity greater than one (the negative value is ignored). You might want to compare elastic demand to inelastic demand, elastic supply, and inelastic supply.
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Lesson 14: Aggregate Supply | Unit 1: The Concept
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Page: 2 of 20
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Aggregate supply is the relation between real production, measured as real GDP, and the price level, measured as the GDP price deflator.- This is comparable to the relation for aggregate demand and lets us combine both relations to form the aggregate market.
- How does the price level affect the supply of real production? For markets, the law of supply is that a higher price induces an increase in the quantity supplied. Does this work for aggregate supply, too?
- How the price level affects real production depends on the difference between the short run and long run.
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NUMBER OF SELLERS, SUPPLY DETERMINANT The number of sellers willing and able to sell a good, which is assumed constant when a supply curve is constructed. The number of sellers is one of five supply determinants that shift the supply curve when they change. The other four are resource prices, production technology, other prices, and sellers' expectations.
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Lewis Carroll, the author of Alice in Wonderland, was the pseudonym of Charles Dodgson, an accomplished mathematician and economist.
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"If anything terrifies me, I must try to conquer it. " -- Francis Charles Chichester, yachtsman, aviator
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DTI
Department of Trade and Industry (UK)
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